Phosphorous is treated as an impurity in conventional steels owing to segregation of phosphorous and formation of brittle phosphides along the grain boundaries. It is responsible for cold and hot shortness in wrought steels. In conventional powder metallurgy, involving compaction and sintering, high phosphorous content (up to 0.7%) in Fe-based alloys exhibit attractive set ofmechanical andmagnetic properties. These powder-processed alloys suffer from increasing volumetric shrinkage during sintering as phosphorous is increased beyond 0.6%. Thus both cast as well as conventional powder metallurgy routes have their own limitations in dealing with iron–phosphorous alloys. Hot-powder forging was used in the present investigation for the development of high-density soft magnetic materials containing 0.3–0.8% phosphorous to overcome these difficulties. It was observed that phosphorous addition improves the final density of the resulting product. It was further observed that hot-forged iron–phosphorous alloys have excellent hot/cold workability and could be easily shaped to thin strips (0.5–1.0 mm thick) and wires (0.5–1.0 mm diameter). The powder hot-forged alloys were characterized in terms of microstructure, porosity content/densification, hardness, softmagnetic properties and electrical resistivity.Magnetic properties such as coercivity 0.35–1.24 Oe, saturation magnetization 14145–17490 G and retentivity 6402–10836 G were observed. The obtained results were discussed based on the microstructures evolved.